The divestiture process

The Tidewater Group is a small, private Investment Banking firm, representing a variety of clients in all segments of the food industry — in which we specialize. Since our focus is very narrow we have developed an extensive list of relationships. Over the past nineteen years, we have been given tours of plants and offices, or enjoyed lunch and dinner with many of the key owners/officers in the food industry. In addition, “The Group” has been asked to provide several associations (such as NASFT) with seminars on the acquisition and divestiture process. This network of former associates, business contacts, association members, and friends stay in touch on a routine basis. As a result, phone calls are returned and owners/senior managers are willing to listen to potential opportunities.

The Tidewater Group currently maintains 42 databases with over 45,000 food processing, distributing and importing companies in the food industry. Nineteen of the databases are listed below.

Baked Goods (406)

Beverage & Wet Sauces (903)

Catalogue Merchants (730)

Confectionery (1,011)

Dairy, Deli & Cheese (643)

Distributors (710)

Importers (398)

Dry Seasoning Mixes & Ingredients (767)

Food Service & Industrial (17,230)

Frozen & Refrigerated products (including pasta) (1,969)

Meats (Chicken, beef, pork) (458)

Packaging & Decorative Wraps (641)

Pasta (467)

Natural/Organic Foods (1,120)

Seafood (341)

Snacks (556)

Specialty Coffee (2,625)

Specialty Foods (5,310)

Venture Capital Firms & Investors (258)

The databases are kept up-to-date with information on products, size, location, key contacts and interests. As a result, we are able to conduct acquisition and divestitures services quickly, quietly and efficiently. This enables our clients — which are interested in acquiring companies — to focus on their business. It also provides those clients interested inselling their companies/divisions/product lines— the ability to move foreword during the saleprocess, with minimal disruption to their organization.

A. Corporate Investment & Divestiture for Companies & Products: The Tidewater Group employs the classic marketing approach to assist our clients in maximizing value for their company. This methodology has been utilized and perfected by the large Investment Banking firms that specialize in the Fortune 500 We believe that this method will identify those corporations and individuals that will provide our clients with the best opportunity to achieve their objectives for value, and other shareholder concerns. A brief explanation of the process may be helpful. TGI uses the same methodology to seek investors as it does to seek potential acquirers. As a result, the following applies to both types of searches.

B. The Marketing Process: Commences with a corporate valuation and continues until the final closing. The services performed will include:

1. Corporate Valuation: Provides a price range you could expect to receive from selling the company in today’s market. We will use a variety of methods to arrive at the projected range.

2. Confidentiality Agreement: Will be developed for prospective acquirers to sign prior to receiving information on the company.

3. Confidential Business Review: The CBR will provide prospective acquirers with the information required to make a decision. It will include:

• A company history including significant events, any awards received, and other information that would provide background on the company’s success;

• Listing of the product lines and pricing, including advertising slicks or other pictures of the line; industrial companies should provide a listing of the ingredients they supply or the type of products they develop;

• Description of existing facilities included in the deal (if any);

• Description of sales strategy, (grocery, specialty, natural, food service, industrial, mail order, etc.) and whether sold by a distributor, handled by a broker or sold direct;

• Recent financial statements (preferably 3 years, with the last year restated to put above average owner compensation & perks back into income).

4. The Search: Since we operate on a national basis in the food industry we will review our databases for the most likely corporations or individuals interested in investing in or acquiring your type of company or product. We will work daily to bring the top candidates to the table. This will include:

A. Contact with top prospects: The initial calls to 5-7 companies that we know are on the look out for middle-market acquisitions in the F & B market.

B. An expanded search: If necessary, after the initial contact with top prospects, an expanded search will be taken in appropriate F&B segments of the market. The approach we take will be to search our databases:

• Identifying likely candidates;

• Mailing a letter to prospective acquirers describing the company (without identifying) and the potential opportunity;

• Follow-up phone calls to those who receive the CBR to ascertain the level of interest;

• Answering questions, providing information and doing what ever is necessary to bring the party (or preferably parties) to the table.

5. Negotiation: We will negotiate or assist in the negotiations as directed by our client. We will work side by side with our client to make sure they get the best value for their company.

6. Due Diligence: We will provide guidance and direction to you during the due diligence process including, what to expect, what information and people to have available.

7. Closing Process: We will manage the process to make it as smooth and stress-free as possible.

C. The Engagement Agreement: The Tidewater Group typically works for clients based on an Engagement Agreement. The Agreement will spell out what services will be performed and the costs associated with them. The amount of time it takes to successfully conclude a transaction varies but usually runs six to nine months — some go more quickly, some take longer, but a six- to nine-month average is not unusual.

D. Costs and Fees:

• Retainer: Is based on the size and complexity of the company. (See Engagement Agreement)

• Company Valuation: Amount depends on the size and complexity of the client’s company. (See Engagement Agreement)

• Transaction fee: Paid when the transaction closes. It is based upon a percentage of the selling price (see Engagement Agreement).

• Out-of-Pocket Expenses: Out-of-pocket costs are billed and are payable monthly. Marketing: Costs incurred in placing the company on the market. These costs (postage, copying, express mail, typing, collating, binding, etc.) are paid by the seller as they occur.

• Other expenses: Are those requested by the seller or agreed to in advance, such as plant visits, or other items of significant cost not normally included in standard out-of-pocket expenses.

E. Office, Plant & Facilities: When there are physical facilities available for sale with the business the Tidewater Group will make every effort to have the buyer of the business, also acquire the facilities. Tidewater Group’s effort to sell the physical facilities will be limited to those organizations interested in acquiring the business. If the buyer of the business acquires the physical plant, a fee will be due Tidewater Group for the sale of the facilities (See Engagement Agreement).

F. Investors: Under some circumstances it is possible to interest venture capital or private equity investors in small food companies. When this is the objective, TGI will use its databases to attempt to identify these companies or individuals. Generally, the same methodology and Fee structure are uses as for an acquisition.

G. License Arrangements: Some companies desire to generate an income stream based upon their reputation (restaurants and significant brands) while not being in the production and/or distribution business. We work with these clients, to value their products and determine an appropriate royalty rate for a license. We then work with prospective acquirers to assist them in understanding the value already developed with the existing product sales and the opportunity that is present in the license arrangement for the brand.

The Tidewater Group would enjoy working with you to achieve your objectives. Since “The Group” works on a national basis — and is solely focused on the food industry — webelieve we can achieve the best value, for your company in today’s market. In addition, because of our pre-qualifying work, the disruption of your business will be greatly reduced. We will work closely with you throughout the entire period so that you are comfortable with the process and the final result